Local Welfare Provision Update

Having announced the ending of dedicated funding for local welfare provision, the government has made £74 million available to councils in the local government finance settlement for 2015/16 in part to help fund local welfare provision schemes. Of this, London boroughs receive £14 million. This briefing explains the background to local welfare schemes and describes the representations that London boroughs made – through London Councils – to ensure that an element of funding for local schemes was retained.

Overview

There has been some element of one-off emergency assistance provided for within the welfare state since its inception in 1945, be it through exceptional grants, single payments, exceptional additions, special needs payments or, more recently, budgeting loans, community care grants and crisis loans.

In April 2013, discretionary elements of the Social Fund – a Department for Work and Pensions (DWP) scheme that provides financial support for needs that can be difficult to meet from regular income – were abolished. While the regulated elements such as cold weather payments and Sure Start maternity grants still exist, funding for community care grants and crisis loans was transferred to upper-tier local authorities who were asked to set up local welfare provision schemes.

All London boroughs were successfully operating such schemes as of 1 April 2013, when the transfer took place.

Nine months after these schemes began operating, the government revealed in the 2013 Autumn Statement that the dedicated funding stream for local welfare provision – which amounted to £178 million a year – would be abolished from 2015/16.

Response to abolition of funding

London Councils called on the Departments for Work and Pensions and Communities and Local Government to reconsider the decision to abolish the local welfare provision grant and to learn from councils’ experiences of running local schemes and awarding Discretionary Housing Payments to influence the design of Universal Credit.

In the summer of 2014, a judicial review was brought against the government’s decision to withdraw funding by a disabled resident from Cheshire with the Child Poverty Action Group acting as an ‘intervener’. The London Borough of Islington acted as an ‘interested party’. The review was brought on the grounds that the decision to cut the funding had been made:

- Without replacing the funding elsewhere
- Without performing an equality impact assessment
- Without proper consultation; and
- Without awaiting the outcome of a detailed review of the first year’s operation of the scheme that the DWP had committed to undertake

In September 2014, a month before the judicial review was due to be heard, the government signed a consent order in which it undertook to revisit the decision, complete the review, consult with stakeholders and carry out an equalities impact assessment.

The consultation invited views on how local welfare schemes should be funded in 2015/16, with the government outlining four options: 1) to simply leave upper-tier local authorities to fund provision from existing budgets; 2) to identify an amount of each upper-tier local authority’s grant which would notionally relate to local welfare provision based on previous trends; 3) to topslice Revenue Support Grant to fund a section 31 grant which would be ringfenced for local welfare provision; or 4) any other potential options which, if they were to call for additional funding over and above what had already been provided, would need to be supported by robust evidence showing the need for such extra funding.

London Councils submitted a response to this consultation which collected spending figures from boroughs to show the real and growing demand there was for local welfare assistance.

The response highlighted how local schemes were better targeting support at those most in need and were providing value for money. It called for funding to be maintained. The danger of cutting funding for local welfare provision ahead of the roll-out of Universal Credit – where the potential for the introduction of direct, monthly payments, seven day waiting periods and the fact that sanctions will apply to the whole of a claim, rather than just the employment component to increase demand for emergency support – was especially stressed.

London Councils’ response also addressed the perception that local authorities – London boroughs included – had failed to spend the money that had been allocated to them for local welfare provision. Reasons for this included:

- Low initial awareness of local schemes and available funding
- The replacement of straight cash awards with awards that were often of an ‘in-kind’ nature or through vouchers/store cards leading to lower demand than anticipated
- Caution in scheme design as a result of potential funding withdrawal
- A lack of in-depth data from DWP on previous expenditure also causing boroughs to adopt cautious approaches to scheme design
- Boroughs simply being more effective in targeting their local schemes compared to the centralised predecessor schemes upon which initial allocations were based.

The draft local government finance settlement published in late December contained the government’s response to the consultation. This was to pursue ‘Option 2’, whereby a notional amount of almost £130 million would be identified in upper-tier local authorities’ general grants relating to local welfare provision. It should be emphasised that this option did not amount to additional funding for local schemes.

London Councils’ response to the draft settlement included an appendix criticising the government’s proposed approach to funding local welfare provision and reinforcing the case for maintaining separate, additional funding. This sought to demonstrate how investment in local schemes had saved money for or reduced demand on other government departments of public agencies – for instance through helping to free up bed spaces in the NHS by funding the refurbishment of vulnerable patients’ accommodation so doctors could be confident in discharging them.

The response was based on real life case studies submitted by London boroughs and which were also used to form the basis of direct lobbying of ministers.

**Announcement of final settlement decision**

The final settlement was published on 3 February and included an extra £74 million for upper-tier authorities “to recognise that councils have asked for additional support, including to help them respond to local welfare needs and to improve social care provision”. Analysis of individual authorities’ allocations shows that almost £14 million of this extra funding will be received by London boroughs, making London the single biggest recipient of all the English regions of this extra funding.

While extra funding has been made available, individual local authorities’ allocations still include a notional amount linked to local welfare provision. But this does not include the extra funding that has been made available.

**Commentary**

The government’s decision to make extra funding available is welcome recognition of the real and growing demand for local welfare assistance.

However, the government’s approach to funding local welfare provision remains confusing and is unlikely to satisfy authorities that are seeking stability. By identifying a notional amount in each upper-tier local authority’s general grant, it creates the impression that the government is fully funding local welfare provision, which is not the case. To add to the confusion, the extra funding that has been made available is not included within this notional amount.

Perhaps more fundamentally, there is no guarantee that the extra funding that has been made available will be repeated in future years and, as such, is not a long-term solution. Boroughs that are providing local welfare schemes will need to continue to demonstrate the demand for such provision and the value in its remaining fully funded by government.

**Author:** Dan Drillsma-Milgrom, Principal Policy and Projects Officer (T: 020 7934 9572)

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**Links:**

Final Local Government Finance Settlement 2015/16

This member briefing has been circulated to:

Portfolio holders and those members who requested policy briefings in the following categories: Housing; Localism, Devolution and Democracy; Local Government Finance